Biological Diversity Ecosystem Condition and Productivity Soil and Water Role in Global Ecological Cycles Economic and Social Benefits Society's Responsibility
Economic and Social Benefits Distribution of Benefits Sustainability of Benefits
Indicator 5.3.1 - Annual harvest of timber relative to the level of harvest deemed to be sustainable Indicator 5.3.2 - Annual harvest of nontimber forest products relative to the level of harvest deemed to be sustainable Indicator 5.3.3 - Return on capital employed Indicator 5.3.4 - Productivity index Indicator 5.3.5 - Direct, indirect, and induced employment Indicator 5.3.6 - Average income in major employment categories
Indicator 5.3.4 - Productivity index
supporting indicator


Productivity is a measure of how much output is produced per unit of input. Outputs of manufactured forest products include wood-fabricated materials (e.g., lumber, veneer, panels, containers, crates) and wood pulp and paper products (e.g., newsprint, various grades of paper, wrapping and packaging paper, paperboard). Forest inputs needed to produce this output include labor, capital, and materials such as logs and bolts, pulpwood, and wood chips. Productivity can be measured as output per worker (i.e., labor productivity) or as total factor productivity, which is the difference between output growth and a weighted average of input growth.

Productivity growth is the most important way to ensure the long-term economic growth and standard of living of Canadians. Companies increase their productivity by improving the use of one or more production factors. For example, investments in new technology and equipment can substitute capital for labor, thereby increasing labor productivity (i.e., the amount of labor per unit of output decreases). Similarly, investments in technology to improve wood use (e.g., reducing sawmill blade kerfs to reduce wood waste) will result in increased wood productivity. These improvements, in turn, lead to improvements in industrial competitiveness and result in an increase in social prosperity. Productivity growth is a very important determinant of the long-term competitiveness of the Canadian forest products industries in world markets.

Data from the Centre for the Study of Living Standards (CSLS) spanning 40 years have been used to analyze labor productivity growth in the forestry and logging, wood products manufacturing, and paper manufacturing subsectors in Canada (Figure 5.3e).

Figure 5.3e

Figure 5.3e Labor productivity growth in logging and forestry, wood products manufacturing, and paper manufacturing: comparison with the total economy (1961-2000). (Source: CSLS 2004)

Labor productivity and growth in the forestry and logging subsector surpassed the average for all industries until the 1990s. The 1990s then saw an increased regulatory burden and increased logging costs as industries moved into second growth and lower productivity stands of timber. Higher prices for forest products also likely led to harvesting of previously uneconomic stands, thereby increasing costs and reducing productivity. More recent data based on a slightly different grouping of industries indicate an average annual growth rate of 3.56% for this sector, compared with 3.5% for all industries, from 1997 to 2002.

The labor productivity growth for the wood products manufacturing subsector exceeded the average labor productivity growth for all industries throughout most of the 1970s and 1980s. Over the 40-year period of the study, average productivity was 2.7% compared with 1.9% for all other industries. The more recent data show that labor productivity growth has increased in this subsector, growing at an average annual rate of 7.07%, or twice the average rate for all industries, between 1997 and 2002.

During most of the 1960s and 1970s, labor productivity growth in the paper manufacturing subsector remained below the average for all other industries. However, labor productivity growth rebounded and increased rapidly in the 1990s, likely due to technological improvements. Between 1997 and 2002, this subsector's average annual growth rate fell back to 2.92%.

Some of the productivity growth in the last decade has been achieved through the introduction of new technologies, which has led to the loss of some jobs, particularly in the paper manufacturing subsector (Indicator 5.3.5). However, new technology has also resulted in increased use of harvested wood. For example, the Quebec harvest in 1988 was about 30 million m3, much the same as it is today. However, in the 1980s, the Quebec pulp and paper industry started a technological turn whereby the process of pulping small-diameter trees was gradually replaced with the process of pulping shavings produced by sawmills.

This technological change required considerable investment, but reduced the cost of supplying pulp and paper mills with raw material. The timber allocation that was held by those pulp and paper mills that changed their pulping process was then allotted to sawmills. The possibility of improved profits from using the newly allotted small-diameter trees provided an incentive for sawmills to develop and invest in technology to saw small logs. Within 15 years, with the assistance of organizations like Forintek and through an influx of local ingenuity, the volume of lumber produced from the same volume of wood doubled, while overall pulp and paper production also grew.